Scalping Strategies

Scalping involves making many quick trades to capture small price movements, aiming for consistent daily income.

What is Scalping?


Definition

• Trades lasting seconds to minutes
• Small profit targets (5-15 pips in forex)
• High number of trades per session
• Requires intense focus and discipline

Requirements

• Fast execution platform
• Low spread broker
• Strong internet connection
• Disciplined risk management
• Ability to make quick decisions

Scalping Strategies

Range Scalping

1. Identify tight consolidation range
2. Buy at range bottom, sell at range top
3. Very tight stops (just beyond range)
4. Small targets (half the range width)
5. Works during Asian session and low-volatility periods

Momentum Scalping

1. Wait for strong impulse candle
2. Enter in direction of momentum
3. Ride the wave for 5-10 pips
4. Exit when momentum fades
5. Best during London and New York sessions

Spread Scalping

1. Trade the most liquid pairs
2. Enter on limit orders
3. Target just a few pips above spread
4. Requires very low spread broker
5. High win rate needed

Level-to-Level Scalping

1. Mark intraday support and resistance
2. Trade reactions at these levels
3. Quick entries and exits
4. Use 1-minute or 5-minute charts

Risk Management for Scalping

Position Sizing

• Larger positions with tighter stops
• Risk per trade: 0.25-0.5% of account
• Total daily loss limit: 2% of account
• Stop trading after hitting daily limit

Win Rate Requirement

• Need 60%+ win rate minimum
• Transaction costs are significant
• One big loss erases many small wins
• Discipline is everything

Best Conditions for Scalping

• High liquidity sessions (London, NY overlap)
• Trending or volatile conditions
• Clear support and resistance levels
• Low spread environment

Common Mistakes

1. Holding losers too long (turns scalp into swing)
2. Not accounting for spread and commissions
3. Overtrading from boredom
4. Revenge trading after losses
5. Scalping during news releases

Key Takeaways

1. Speed and discipline are essential
2. Keep a strict daily loss limit
3. Focus on high-probability setups only
4. Transaction costs matter enormously
5. Not suitable for beginners